Continuing its swing, the rupee depreciated 7 paise to close at 85.77 (provisional) against US dollar on Friday, driven by weak domestic markets and risk-off sentiments amid trade tariff uncertainty.
Even as investors have started to shrug off US President Donald Trump’s sudden tariff announcements, global market sentiments were dented with Trump’s latest decision to impose 35 per cent tariffs on Canadian goods, opined Forex traders.
At the interbank foreign exchange, the rupee opened at 85.76 against the US dollar, and touched an intra-day low of 85.91 during the day. The local unit finally settled for the day at 85.77 (provisional), down 7 paise from its previous close.
On Thursday, the rupee pared initial gains and settled for the day higher by 3 paise at 85.70 against the US dollar.
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Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said he expected the rupee to weaken further as the trade war continues to dent global risk sentiments.
“Uncertainty over trade tariffs and higher US dollar index may also pressurise the rupee. However, a weak tone in crude oil prices may support the rupee at lower levels,” he said, adding that USD-INR spot price is expected to trade in a range of 85.55 to 86.25.
Despite staying in a narrow range, the rupee traded in a volatile manner, said Forex traders, mostly because market participants waited for clarity on the US-India interim trade deal.
Meanwhile, Brent crude, the global oil benchmark, rose 0.34 per cent to USD 68.87 per barrel in futures trade.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.13 per cent to 97.77.
On the domestic equity market front, the Sensex dropped 689.81 points or 0.83 per cent to settle at 82,500.47, while the Nifty lost 205.40 points or 0.81 per cent to close at 25,149.85.
Foreign institutional investors (FIIs) purchased equities worth ₹221.06 crore on a net basis on Thursday, according to exchange data.
Meanwhile, India is trying to negotiate a mini-trade agreement with the US, Special Secretary in the Department of Commerce Rajesh Agrawal said on Thursday. Agrawal is also the chief negotiator of the proposed India-US bilateral trade agreement and will visit Washington in the coming days for the deal.
The aim is to conclude the first phase of this pact by fall (September-October) of this year.
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